At the end of April, the court will start hearing the criminal case in which the former members of the board of “Latvijas dželzcelas” are accused of abusive use of their official position, which caused losses to the state in the amount of one and a half million euros. Eric Shmukst was the last of the defendants to leave the board. He resigned from his position in January of last year, so that the accusation would not harm the reputation of “Latvijas dželzcelas”, however, Šmuksts has not left the company. Immediately after leaving his position, he was hired as acting director of technical management.
At the end of April, the court will start hearing the criminal case in which the former members of the board of “Latvijas dželzcelas” are accused of abusive use of their official position, which caused losses to the state in the amount of one and a half million euros. Eric Shmukst was the last of the defendants to leave the board. He resigned from his position in January of last year, so that the accusation would not harm the reputation of “Latvijas dželzcelas”, however, Šmuksts has not left the company. Immediately after leaving his position, he was hired as acting director of technical management.
Accusation of 1.5 million euros
In “Latvijas dzelzceļa” for almost ten years, managers held not only the positions of board members, but also presidents or vice-presidents. Employment contracts were concluded for positions in the Council of Presidents, which give several advantages, for example, firing employees is not as easy as recalling board members. The employment contracts also ensured that large compensations for not working for competitors could be negotiated in the event of layoffs, which happened several times.
In the 2020 audit, the State Audit found that due to the double positions, company managers could receive additional payment for the same duties.
The Prosecutor’s Office started criminal proceedings following the application of Transport Minister Tālis Linkaita (“Conservatives”). The investigation was conducted by KNAB.
In the criminal trial, it is calculated that
from 2013 until the dissolution of the Council of Presidents in 2019, the state suffered losses in the amount of 1.5 million euros.
The Prosecutor’s Office does not comment on the case in detail, but confirmed that the amount includes both a part of the monthly salary and compensation after the termination of the right to work. The prosecutor’s office brought charges of abusive use of official position for greedy purposes against four persons – Ugis Magonis, Edvīnas Bērziņas, Aivars Strakšas and Āriks Shmukstas.
Resigns due to accusation
Magonis left the company in 2015 due to accusations of bribery. Bērziņš and Strakšas left in 2019 after a conflict with Transport Minister Tāli Linkaits, while Linkaits did not criticize Shmukstas. He remained on the board until the middle of January last year, when “Latvijas dzelzceļš” announced that the long-time member of the board Šmuksts had submitted his resignation.
It coincided with the time when the prosecutor’s office announced the initiation of criminal prosecution in the Presidential Council case. On the other hand, the reason for Shmukst’s departure was not mentioned in the statement of “Latvijas dželčesas”. Chairman of the Council Jānis Lange expressed his gratitude for the work and wished him success in the future. Now both “Latvijas dzelzceļš” and Lange confirm that the reason for Shmukst’s departure was the accusation.
“Mr. Šmuksta submitted his resignation to the board with a request to remove him from the position of a board member due to the criminal proceedings initiated here, in order not to cause a possible reputational risk to “Latvijas dželčas” said Agnese Līcīte, the representative of “Latvijas dželčas”.
In turn, the chairman of the company council stated:
“We learned that Mr. Shmukst has been granted status in an initiated criminal proceeding. Of course, in the opinion of the council, this was not compatible with the position of a board member. Therefore, Mr. Šmuksta himself applied to the council, and the council accepted the fact that Mr. Šmuksta resigned from the position of a member of the board of “Latvijas dželčas”. We saw that it is not possible to combine the work in this status in the board of “Latvijas dželzcelas”.
After his resignation, Shmukst was appointed to the position of director
However, Shmukst did not leave the company. The board decided to appoint him as acting director of technical management. It is a position in the company’s structure directly below Shmukst’s previous position as a board member responsible for technical operation issues. The position was vacant because the previous technical director Egils Feldmanis was transferred a few months earlier to the newly created position of board advisor.
The chairman of the board at that time was Māris Kleinbergs. He did not agree to the interview, but he emphasized in a telephone conversation that the transfer of Feldmanis to the position of adviser was in no way connected with the freeing of the place for Shmukst. The board needed an advisor for “Rail Baltica” issues.
Meanwhile, Lange states that after accepting Schmukst’s resignation, he did not know that he would remain working as a director in the company. The board informed about it some time later. Lange believes that the most important thing is that Shmukst no longer represents the company as a public official:
“The chairman of the board also addressed the board and informed that these competences, which Mr. Šmukst has for more than 30 years working at the “Latvijas dzelzceļa”, and also taking into account his contacts with the railways of neighboring countries [uzņēmumiem], in order to ensure the successful transportation of these cargoes, that these competences should be kept within “Latvijas dželčesas”. Of course, we invited the board of “Latvijas dželzce” to look for a replacement, so that we could find these competencies somewhere else, but as far as we have talked with the board, it is not so easy to do.”
The board is no longer looking for a replacement
The council announced a competition for the position of board member in matters of technical operation left by Shmuksta, but there were no suitable candidates. The position has now been eliminated. “Latvijas dzelzceļā” emphasizes that Šmukstas does not have appropriate security measures that would prevent him from occupying the position of director. At the same time, the company states that Shmuksts is only performing duties, and it is possible that a tender could be announced for the position: “Currently, the management functions of technological processes are also being reviewed, and therefore, in the foreseeable future, a tender could also be announced for the position of manager of this field.”
On the other hand, there is no clear answer to the question of whether Shmuksts will remain in his position even in the event of a conviction: “In this case, a decision will be made in accordance with the best interests of the company,” said Līcīte.
Shmukst himself was not available for the interview because he was on a business trip.
The criminal case is transferred from Riga to the court in Liepāja
Shmuksta and the other defendants in the criminal case will be tried at the end of April at the Kurzeme District Court in Liepāja. The judge of the case is Renārs Jurmalis. The prosecutor’s office had transferred the case to the Riga city court, but it proposed to send it to the Liepaja court, which is less busy. The Criminal Procedure Law allows that a court can transfer a case to another court if it can be processed more quickly in this way. The Riga City Court stated that Judge Anita Dzērve, to whom the case was first assigned, is currently looking at 43 cases, while Kurzeme District Court Judge Renārs Jūrmalas has 14 criminal cases pending.
The Riga Regional Court accepted the transfer of the criminal case of “Latvijas dželzka” to the Kurzeme District Court in Liepāja. The prosecutor of the case has no objection either. The Riga City Court will ensure that the participants in the case will be able to connect to the hearings remotely.
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